12.tactical-operational-sustainable-transportation.pdf

MODULE 3: Tactical & Operational Sustainable Transportation Defining the role of Transportation in Supply Chain Modes of Transportation...

MODULE 3: Tactical & Operational Sustainable Transportation Defining the role of Transportation in Supply Chain Modes of Transportation Improvement Potentials Impact to Sustainability and Trade-Offs ©2023 B2G Copyright MODULE 3 : TACTICAL & OPERATIONAL - SUSTAINABLE TRANSPORTATION Defining the role of Transportation in Supply Chain ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > DEFINING THE ROLE OF TRANSPORTATION IN SUPPLY CHAIN Transportation is connecting point within the supply chain Transportation is a physical reflection of the supply chain strategy of a business, indicating the level of quality of the Supplier planning and execution processes, as well as the maturity of collaboration within the relevant part of the supply chain network ( e.g. supplier – customer relationship). Warehouse Transportation is connecting the points within the supply chain, moving the inventory from one point to another and is therefore a significant cost and lead time Distribution Center component, as well as an important lever for the sustainability, especially in terms of the CO2 footprint Customer ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > DEFINING THE ROLE OF TRANSPORTATION IN SUPPLY CHAIN Transportation is one of the largest sector contributors in Carbon emission 97% CO2 represent 97.1% of total greenhouse gas (GHG) of US transportation GHG in 2020 US Environmental Protection Agency (EPA) report May 2022 ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > DEFINING THE ROLE OF TRANSPORTATION IN SUPPLY CHAIN Greenhouse gas emissions are categorised into three groups or 'Scopes' by the most widely-used international accounting tool, the GHG Protocol Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain. ©2023 B2G Copyright MODULE 3 : TACTICAL & OPERATIONAL - SUSTAINABLE TRANSPORTATION Mode of transportation ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Different transportation mode have different impact on sustainability and none of the mode can exclusively cover all requirement US Environmental Protection Agency (EPA) report May 2022 ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Mode of transportation impact ranked by type of consumption Type of Consumption High Modes fueled with Diesel or gasoline Hybrid Impact to sustainability & CO2 Electrified footprint Fuel cells, LNG -Liquified Natural Gas Solar vehicles Animal carts Low Manpower driven vehicles ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Mode of transportation impact ranked by type of vehicle and capacity Transportation Capacity Truck High High volume & Bus capacity Ship Airplane Impact to sustainability & CO2 Train Tram footprint Bus Medium volume & Cars capacity Motorbikes Solar vehicles Animal carts Low volume & Manpower driven vehicles Low capacity ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Mode of transportation impact ranked by distance Distance High Inter-continental Impact to sustainability & CO2 Long Distance Continental Global footprint Aera Short Distance Local Regional Low ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Rail way is the less pollutive transportation mode and so routing should be design to maximize the use of intermodal transportation Majority of fuel consumption of traditional transportation modes is based on oil Railway: Electrified, but the mix of power for electrification is relevant Road: The latest trend is going into electrification of vehicles too Rail cannot connect the points from shipper to consignee end-to-end Solution: Design and orchestration of proper intermodal transportation network Most influence: By the shipper or buyer (e.g. manufacturer, FMCG and trading companies) Shippers/ Buyers need for goods are the trigger for the transportation & logistics markets US Environmental Protection Agency (EPA) report May 2022 ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Rail way is the less pollutive transportation mode and so routing should be design to maximize the use of intermodal transportation Freight account for 30% of all transport related emissions and these are set to increase four-fold by 2050. For businesses considering how to remove emissions from their supply chain, one area to look is in the proportion of freight by mode. Air Freight almost 35 times more carbon intensive than ocean freight. Air freight can be the right choice for certain products ( e.g. perishable or very high value), however a reliance on air freight is also caused by other factors. Poor planning execution or volatile demand can exacerbate the issues of a Far-East sourcing strategy. Majority of fuel consumption of traditional transportation modes is based on oil Railway: Electrified, but the mix of power for electrification is relevant Road: The latest trend is going into electrification of vehicles too Rail cannot connect the points from shipper to consignee end-to-end Solution: Design and orchestration of proper intermodal transportation network ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > MODES OF TRANSPORTATION Manager should consider all Road vehicles alternatives to select the most sustainable way to achieve business goal Tram - Electrified Solar - cars & Animal carts bikes Truck Diesel or gasoline: ○ Long distances, road trains and trucks ○ Construction transportation, special trucking ○ Regional distances, mid-size trucks (e.g. 7,5 tons) ○ Short distances, local distribution, City logistics Bus Bicycles or Motorbike similar ○ Courier services, Sprinter and cars Diesel or gasoline Gasoline Electrified (or semi) Hybrid Hybrid Electrified Regular bike, 100 % Electrified manual Electrified Fuel cells Brennstoffzellen ©2023 B2G Copyright MODULE 3 : TACTICAL & OPERATIONAL - SUSTAINABLE TRANSPORTATION Improvement Potentials ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPROVEMENT POTENTIALS Transportation sustainability can be improve on different lever and all improvement potential should be consider in the sustainable transportation process Documents and data Fleet management Each year, more than 7800 Think about capacity Route Optimization tons of paper documents utilization and efficiency As discussed before all are processed mode of transportation It’s the equivalent of 80 should be consider to Boeing 747 freighters filled optimize route… with paper Packaging Service Provider selection Think about all the waste Selecting Green partners after unboxing the product ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPROVEMENT POTENTIALS IATA drives forward a new standard for data sharing The eAWB revolution in air transportation The Air Waybill (AWB) is a critical air cargo document that constitutes the contract of carriage between the “shipper” and the “carrier” (airline). The Electronic Air Waybill Resolution 672 (MeA) removes the requirement TO for a paper AWB. There is therefore no longer a need to print, handle or archive the paper, largely simplifying the air cargo process. Introduction in 2010, e-AWB became the default contract of carriage for all air cargo shipments on enabled trade lanes on 1 January 2019. This key industry milestone brings air cargo into a new era where digital processes are now the norm and paper is the exception. As of September 2020 the eAWB penetration reached 71.3% on the legally feasible trade lanes ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPROVEMENT POTENTIALS Drumguard at Evonik reduced waste in transportation Evonik is one of the world's leading specialty chemicals companies, with operations in more than 100 countries. In 2019 it introduced the DRUMGUARD for securing loads. DRUMGUARD comprises two components and is therefore far easier to use than conventional straps and shrink-wrap film. This reusable system replaces non- reusable plastic or metal materials. This system can be installed 90% faster than conventional methods without the need for special equipment. ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPROVEMENT POTENTIALS Mauser IBC solution increased efficiency in transportation fleet utilization Mauser Packaging Solutions is pleased to introduce an IBC solution that features a new composite pallet designed to maximize volume and loading efficiency of Intermediate Bulk Containers (IBCs) on 20-ft ISO shipping containers. Traditionally, door height restrictions block the use of two potential IBC spaces near the container opening and require that IBCs are loaded individually and double- stacked once inside the container. The new pallet design accommodates deeper nesting of IBCs, allowing the shipper to load IBCs stacked two high, improving loading efficiency more than 50%, and eliminating the two unused spaces near the container opening. ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPROVEMENT POTENTIALS Hitachi Solution use of Analytics tools to optimize supply chain Intelligent supply chain management calls for the implementation and leveraging of modern technologies to optimize various facets of the supply chain. With an intelligent supply chain, companies leverage modern technologies to collect data and develop insights to better optimize their supply chain. This can save on costs, increase profitability, increase their speed to customers, and get ahead of their competition. Intelligent supply chain management is possible when businesses take full advantage of the latest retail digital transformation technologies – artificial intelligence (AI), machine learning (ML), predictive analytics, unified commerce, and big data. This type of management have a lot of advantages such as Synchronize planning Avoid empty driving distance Increase efficiency among all the supply chain ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE LOGISTICS > Sustainable Logistics Transportation cost optimization should not focus only on fuel cost but also account for utilization and other cost element to be sustainable When thinking about transportation costs, the primary cost seems to always reflect fuel costs. However, each vehicle contains thousands of parts, gallons of oil, and at least four tires, which are all designed to wear out over time. Each of these products has a finite life expectancy, and inefficiency in transportation will only result in the replacement of these items at a faster rate. Unfortunately, this increased rate represents the loss of sustainability within a given transportation company For example, driving with an empty truck from a destination to a distribution center in another state creates many forms of waste. The life expectancy of all of the materials in the vehicle are cut in half immediately without any benefit to the company. This does not even take into account emissions nor wear on national roadways. Every movement costs money, and some of these costs are not even the responsibility of the company, such as damage to roadways. However, each consequential action, such as the repairing of the roads, results in additional energy expenditure somewhere. As a result, the company’s carbon footprint grows more with each movement ©2023 B2G Copyright MODULE 3 : TACTICAL & OPERATIONAL - SUSTAINABLE TRANSPORTATION Impact to Sustainability and Trade-Offs ©2023 B2G Copyright 9 The availability of a supporting infrastructure plays a fundamental role Introducing Sustainability KPIs Majority of fuel consumption of traditional transportation modes is 12 based on oil and the according emission. Natural resources: Waste Information In order to ensure that all alternatives are taken into consideration to Technology enable decision taking for execution of an order to ship goods: The CO2 – emission needs to be considered in any decision for transportation and added into the calculation as a “new KPI” 14 indicating the “costs to the environment”. Pollution & Ecosystems 15 Life on Land & Pollution ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPACT TO SUSTAINABILITY AND TRADE-OFFS Amazon commitment to sustainability Since 2019, Amazon has launch the The Climate Pledge to reach net Zero carbon by 2040. As part of this target Amazon partnered with Rivian and order 100 000 custom electric delivery vehicles. In 2021 Amazon fleet was made of 3,000 electric vans and hundreds of cargo bikes, e-scooters, and walkers, to deliver more than 100 million packages to customers in Europe In April 2022 Amazon launched five electric Heavy Goods Vehicles (HGVs) in its delivery fleet for the first time in the UK. The 37-tonne fully-electric vehicles are now operating from Amazon’s fulfillment centers in Tilbury and Milton Keynes, transporting customer packages with zero tailpipe emissions and using battery power. The five vehicles replace diesel HGVs, resulting in up to 100,000 annual road miles fueled with renewable electricity instead of diesel, preventing 170 tons of CO2e from being emitted. They are the first of nine electric HGVs expected by the end of 2022, joining more than 1,000 electric delivery vans currently on the road in the UK. ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPACT TO SUSTAINABILITY AND TRADE-OFFS Trade-offs & key challenges for sustainable transportation Capacity requirements Management & People Cash flow & limits Availability Competition Risk mitigation Lead time Planning quality ©2023 B2G Copyright MODULE 3: TACTICAL & OPERATIONAL > SUSTAINABLE TRANSPORTATION > IMPACT TO SUSTAINABILITY AND TRADE-OFFS When designing transportation networks, managers should take into account uncertainty in demand as well as availability of transportation Risk management Making transportation decisions in practice Three main risks to be considered in transportation are: Align transportation strategy with competitive strategy Risk that the shipment is delayed Consider both in-house and outsourced transportation Risk of disruptions Design a transportation network that can handle e- commerce Risk of hazardous material Use technology to improve transportation performance Risk mitigation strategies: Design flexibility into the transportation network Decrease the probability of disruptions Pick the right freight forwarder Alternative routings In case of hazardous materials the use of modified containers, low-risk transportation models, modification of physical and chemical properties can prove to be effective ©2023 B2G Copyright